KIRUKU: When will ‘made in East Africa’ become a reality
Resolutions reached during the East African Manufacturing Business Summit in Kigali will lead to massive economic growth in East Africa if implemented to the letter.
It is unfortunate that only a quarter of the total exports from East Africa come from the manufacturing sector – consisting largely of foods and beverages, leather and leather products. The low contribution of the sector to GDP in the region – compared to the African average contribution – is not just worrying but unacceptable.
And although the sector has the potential to grow industries, create jobs and solve the problem of endemic unemployment in the region, it has largely been neglected and is grossly underutilised.
The manufacturing sub-sector considered to be a starter sector in industrializing a country or region is the textile and clothing sector. It has the potential to solve the perennial challenge of unemployment in the region since it is labour-intensive. The agroprocessing sector also has potential for quick growth, especially because it engages a semi-skilled labour force.
Unfortunately, the two sectors are facing myriad challenges that regional leaders are either unable to solve or are reluctant in finding a lasting solution.
Yet, for the manufacturing sector to rise and take its rightful place of giving economic growth a head-start, the region must implement macroeconomic policies aimed at maintaining a competitive exchange rate that would help boost the sector.
Improving the business environment by prioritising on removing barriers to starting and doing business in the region would also help in spurring the sector. Investing in developing the three main trade corridors, and prioritisation of infrastructure development in the areas of energy, transportation and telecommunications, is key to spurring the growth of the sector.
Due to the capital-intensive nature of most large-scale industrialisation projects, it is paramount for the region to encourage public-private partnerships, which are key to driving industrialisation.
The regional leaders should heed the resolution by the Kigali conference to develop policy frameworks for government led industrialisation mega projects that can drive up manufacturing in the region. The EAC partner states should commit a certain percentage of national budgets for industrial development.
The regional manufacturing sector is rocked by key challenges and constraints that have severely hampered its growth and expansion. The legal and regulatory environment in the region is unfavourable to businesses and has consequently led to an increase in the cost of doing business.
The economic infrastructure – such as availability of electricity, road networks and telecommunication across the region – are poor by global standards. This has led to slow growth of the sector. The lack of adoption of new technologies to improve standards has also hindered the growth of the sector in EAC partner states.
For the sector to grow and provide a solid foundation for economic development in the region, partner states must overhaul the education sector and provide a curriculum that promotes science and technology. They must develop national policies and laws that make industrial internships mandatory – especially for engineers, technologists and scientists.
The academia and private sector industrialists must also work closely in order to formulate regional skills development programmes targeting specific skills required by the private sector. Right from secondary schools, technical training colleges and universities, the curriculum must be overhauled to meet the needs of today.
In order for the region to improve the textile and apparel sector, it must put in place programmes to enhance information-sharing and undertake a comprehensive assessment of tariff anomalies that are hurting the sector.
And since the region’s diaspora contributes immensely to the financing of various projects, the region would do well to tap into skills from the diaspora. It should develop innovative financing mechanisms to promote investment in the manufacturing sector by diaspora members through creating investment vehicles that best suit them.
As a region, we should take South Korea as a case study; it is possible to transform the region through developing the human capital and the manufacturing sector. For the region to achieve this, investment in developing and adopting new technologies is paramount. Developing our own technologies and buying out innovated technologies is crucial to developing the high potential in the manufacturing sector.
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